Their pain, however, can be a short squeezer's gain. Understanding Short Squeezes Before you can understand short squeezes, you have to understand how short selling works. The short seller will then sell the stock and hold onto the proceeds in the margin account as collateral.
Already their investment might go down as one of the greatest ever at the prices they are going to be able to sell at.
The scramble for Volkswagen shares, already apparent during the last two months, intensified when Porsche over the weekend revealed that it had increased its equity stake in VW to The stake sale could lead to profits of roughly 1.
Second, and more interesting are some of the names involved on the short side - again some of the "best of the best" in hedge fund world are getting blown up on this trade.
It is really amazing to see these same names in so many stories of similar ilk - SAC and Highside are among the largest and Greenlight is run by a respected value guy who is supposed to be conservative.
Live by the sword, die by the sword I suppose. MS both denied they were involved in this but their stock prices were hammered Tuesday before the denials - somehow I think where there is smoke, there is fire especially with Government Sachs.
If you see so many of your customers in on a trade - I doubt as a prime broker your trading desk is NOT piggy backing. The funds are expected to face billions of dollars in losses, according to prime brokers familiar with the positions, because they were wagering that VW shares would fall.
With VW shares pushing astronomical levels, some hedge funds are calling foul. They are accusing Porsche, already a I just find the kettle calling something black hilarious - "lack of public disclosure" claims by hedge funds? Follow TraderMark and get email alerts Your feedback matters to us!
Want to share your opinion on this article? Disagree with this article? To report a factual error in this article, click here.Executive Summary In , the largest “short squeeze” in the history, done by Porsche’s CFO to acquire control over Volkswagen through option contracts, had caused a huge loss for multiple hedge funds and investment banks in Germany.
A short squeeze is a rapid increase in the price of a stock that occurs when there is a lack of supply and an excess of demand for the stock.
Oct 29, · Short squeezes can occur when the price of a stock gets pushed up strongly by a strong demand buoyed by a shortage in supply of shares. As Investopedia explains, “Short squeezes occur more often in smaller cap stocks with small floats,” or shares freely traded on the market. Oct 28, · Porsche denied it was manipulating the market and said that the market had mixed up cause with effect. But when the short squeeze comes . Even during the infamous Volkswagon / Porsche short squeeze in , aggregate realized losses were probably in the 2 to 6 billion euro range, as the stock did not stay at the elevated level for more than a .
 Short squeezes result when short sellers cover their positions on a stock, resulting in buying volume that drives the stock price up. Oct 29, · Shares in carmaker Volkswagen nearly halved on Wednesday after controlling shareholder Porsche took steps to ease a squeeze on shortsellers who more than quadrupled the price of the stock in days.
We are obviously not involved with this "greatest short squeeze in history" as Volkswagen (urbanagricultureinitiative.com) is on a German exchange and I wouldn't touch something this random and crazy with your 10 foot.
Executive Summary In , the largest “short squeeze” in the history, done by Porsche’s CFO to acquire control over Volkswagen through option contracts, had caused a huge loss for multiple hedge funds and investment banks in Germany.
A short squeeze is a situation in which a heavily shorted stock or commodity moves sharply higher, forcing more short sellers to close out their short positions and adding to the upward pressure.